Interview with Robert Ljoljo in the Saturdays’ supplement of Delo newspaper
Newspaper Delo published an interesting interview with the President of the Management Board of Lek and the Novartis Country president Slovenia, Robert Ljoljo, in the Saturdays’ supplement, on July 3rd, 2021. With the journalist Marjana Kristan they have focused on many areas, from new way of working and P&O, culture, innovation and digitalization, to the state-of-the-art treatments Novartis offers to Slovenian patients and also on the future of the pharmaceutical industry.
As we wish that foreign-speaking people could also read it, we copy a translation of an interview below.
We provide Slovenian patients with state-of-the-art treatments
Robert Ljoljo: President of the Board of Management of Lek and Novartis Country President Slovenia points out that in the past turbulent year they hired a record number of new employees, increased the number of development projects and continued and completed all planned investments. At the same time, they have continued the transformation of the company that has been ongoing for the last few years.
Marjana Kristan Fazarinc
The past year has shaken our way of life and work. How has your way of working changed during this time, as you always stress that we should never stand still because the worst thing is not to make any decisions?
I would illustrate this with Einstein’s saying, which I read on Delo’s twitter, that life is like riding a bicycle. To keep your balance, you must keep moving. And we too have been pedaling constantly. At Novartis, we have a well-developed crisis management model that has come in very handy since the beginning of the pandemic. Our key priorities were the health, safety and well-being of our employees and the supply of medicines to the markets. We quickly realized that we were quite well prepared, even for remote working, which we were able to implement practically overnight due to past efforts in this field, and that the employees in production were protected. And then we started thinking about opportunities to exploit this advantage elsewhere.
What would you like to retain in the long run?
Many things that we thought would take a long time to put into practice could be realized very quickly, especially in the field of digitization. One such typical example was the use of smart glasses, Hololens (note: smart glasses with mixed reality technology, which in combination with software solutions represent a hands-free computer), which was still in its infancy at the time. However, since the inspection could not be done in the corona crisis times, as the inspector could not go into the production site, we were able to take him to production virtually with the help of these glasses. Smart glasses are now used in almost all Novartis sites, including when transferring technologies from one production to another, so we no longer need to travel as much. Thus, technology that was born out of necessity is now used as a competitive advantage or for faster work.
In addition, we have upgraded remote work models for the future. Based on the experience we have gained during this time, we have introduced a new model called Choice with Responsibility that gives employees the choice of how, where and when to work most effectively, in alignment with their team duties and in accordance with the regulations. A prerequisite for this is certainly our company culture, which strives for managers to support and trust employees. This also changes the way of leadership, which was further accelerated by the epidemic. As a result, different working models were created, with a different way of rewarding employees and a different way of setting goals. More than 70 percent of employees have opted for this simple working model, in which, among other things, we do not record the number of hours worked, as we also do not reward more hours worked, but rather, the results. Each individual and each team sets their own goals, the realization of which is then regularly monitored.
How has the company overcome the health and economic crisis so far?
Novartis in Slovenia is one of the largest economic stakeholders, contributing as much as 3.3 percent of Slovenia’s GDP last year. However, the crisis is not over yet. How big it will be and how it will show in different areas, we will see in a few months. In the field of health, we started talking about the syndemic, i.e. synergistic epidemic or the aggregation of epidemics, as the coronavirus pandemic has caused many problems in parallel, such as poorer treatment of other diseases, mental health problems, etc., the extent of which is not yet known. According to some data, almost a third fewer cancer cases have been diagnosed since the onset of the pandemic, and it is not really known how many people will now see a doctor at a later stage of cancer when the prognosis is worse.
The second element that awaits us will be financial, as the G7 is already warning of inflation and price rises, so the question is how the whole system will be re-synchronized, as there are not many classic economic policy mechanisms available. It seems important to me that people understand that the crisis is not over, regardless whether there will be a fourth wave or not, as the matter is more complex.
You mentioned the rise in prices, how is this reflected in your raw materials?
Raw material prices are rising slightly, but this will come to us with a delay as we have long-term contracts, so there is no immediate effect at these levels. The demand for vaccines drives the increased demand for the raw material to produce them which is why prices are already rising in these areas. Growth is likely to continue in the future as other commodities, such as oil, etc., become more expensive. It’s all a matter of long-term contracts, how well you can be insured and how well you can negotiate the price. However, significant inflationary pressures certainly await us.
Going back to Novartis operations in Slovenia last year…
The pandemic initially had an effect on filling supply chains because we were all afraid of what would happen to the supply of medicines. Thus, we first witnessed a jump and then a slowdown in demand, due to the closure of health systems, but we did not have any major problems in this regard. We worked on the robustness of the supply chain. In the vast majority of cases, we already had double sources of raw materials, but during the pandemic we have upgraded the system.
The pharmaceutical industry is relatively robust on the one hand, and on the other hand, we have, as part of the large Novartis group, mechanisms that are additional mitigators in the external environment. The Novartis Group, a part of which is Lek, generated EUR 40.2 billion in sales revenue last year, which is three percent more than the year before, net profit rose by 13 percent to EUR 6.7 billion.
Overall, Novartis performed very well in all segments in Slovenia last year. At the Development Center Slovenia, where half of all Sandoz development projects are carried out, we completed the development and submitted 22 dossiers for medicines in various therapeutic areas. We recorded a 25% growth in the development portfolio. Last year, Biologics Technical Development Mengeš acquired 10 new development projects for innovative biological and biosimilar medicines. All production sites operated smoothly and reshaped the portfolio to include more innovative medicines. We also launched 834 new products from Slovenia to 93 countries around the world, and manufactured and packaged as many as 27 innovative medicines in our production facilities. We brought breakthrough cell therapy CAR-T for the treatment of certain hematological cancers to Slovenia, which has already been received by the first two patients. At the same time, we remained the leading provider of medicines on the Slovenian market.
We hired a record number of new employees in Slovenia last year, around 650, increased the number of development projects, continued and completed all planned investments, continued the transformation of the company, which has been going on for the last few years, and continued the construction of the operations center. We even recorded a two percent sales growth. It is important that we managed to protect the employees and that production did not stop for a single day, which allowed us to ensure the uninterrupted supply of medicines to patients around the world. We truly invested a lot in the health, safety and well-being of the employees to have access to advice and provided additional free psychosocial assistance for the purpose of stress management, reduction of fear, panic and anxiety due to coronavirus.
During the pandemic, however, we did not slow down but focused even more on returning to society. From the very beginning, we donated half a million dollars to the Red Cross and the Slovenian Friends of Youth Association because we knew that the corona crisis would also have a social impact. As there were no disinfectants available, our colleagues in Mengeš made disinfectants, which we donated, about 27,000 liters, to firefighters, civil protection and health-care institutions, the Red Cross and everyone who asked for them. The mayors of the municipalities where our sites are located asked us to help the children, for whom we donated 182 sets of IT equipment.
What does this year bring so far?
The Novartis Group recorded a net profit of EUR 1.7 billion in the first quarter of this year, down five percent from the same period last year. Revenue, meanwhile, rose by one percent to USD 12.4 billion.
Markets and conditions are challenging, and most health systems are not yet operating at the same capacity as before the crisis. Waiting times and lists have been extended, not only in Slovenia, but as a global trend. Therefore, we estimate that this year will be challenging. If there are no new coronavirus epidemic waves, all healthcare systems will slowly be re-established and then we will see where we are.
Due to Covid, on the one hand, we also have fewer infections from other sources, which means, for example, less need for anti-infectives, but on the other hand, we continue with new projects. We already have the eighth similar biological medicine on the Slovenian market. Last year we launched Aimovig for migraine in adults, and this year also alpelizib, the first and only target drug for advanced HR+/HER2 breast cancer with the PIK3CA mutation. We are proud to have produced the active ingredient for this innovative medicine in Slovenia.
And what are the plans for the future?
Novartis is undergoing a transformation as we want to become a more focused pharmaceutical company. We want to be among the top three pharmaceutical companies in the world. On the one hand, we optimize performance, and on the other hand, we place even more emphasis on the use of innovative science and technology to solve the most demanding pharmaceutical issues. Thus, we are focusing on new technological platforms such as radioligands (note: this is a radioactive biochemical substance used for diagnostics or research-oriented study of receptor systems in the body), cell and genetic technology. The trend is biological drugs, but we should not neglect the relatively large portfolio of small molecules, classical chemistry. In this context, Novartis in Slovenia is also adapting and moving along the line from a classic generic company to a more innovative company that can also do complex things. And here will be our key task in the next few years.
Within Novartis, Slovenia has an increasing specific weight, we have the capacity for both small molecules (from development to production of active ingredients and finished products) as well as for the development of biological and biosimilar drugs. With last year’s investments in Mengeš worth EUR 50 million, we strengthen development, clinical studies, as well as production and adapt our capacities even more to more demanding generic products with high added value and innovative products. Two years ago, we began setting up a global operations center, making us a key center for managing Novartis production sites.
However, we are aware of our responsibility in the Slovenian market, being the largest provider of pharmaceutical products with a 13.9% market share and therefore, as a Lek brand in generic products and biosimilars, we take care of the system’s sustainability. We really want to ensure that Slovenian patients have all modern treatments at their disposal through the Novartis brand. We are working very hard to make this available to Slovenian patients as soon as possible.
The Novartis Group invests in new technologies to support its transformation strategy, while optimizing its product network and adapting site and equipment capabilities. Novartis Slovenia continues its transformation from a generic to a more innovative pharmaceutical company - where will this path take you?
Novartis’ main goal remains to become the world’s leading pharmaceutical company, driven by advanced treatment platforms and data science. We adapt our product portfolio to the changing health needs and at the same time increase our efficiency and productivity, which we also achieve by adapting our global production network.
Of course, we are also part of this transformation in Slovenia, where we have a leading position in the pharmaceutical market, and we are in second place in the field of generics. We are also the largest provider of biosimilar medicines. And wherever we operate, we always want to be among the top companies.
That being said, we are still a big enough player in generic products and our focus is on demanding generic products. Half of all Sandoz development projects are carried out at the Development Center Slovenia, which is the largest and best equipped center of its kind within Sandoz, a generic part of Novartis. And if we include biosimilar medicines under generics, let me say that we are also strengthening our position in this area, as the number of development projects is increasing.
In addition to biosimilar drugs, we have recently begun to develop biological drugs. To illustrate; the development of one biosimilar drug costs EUR 100 million and the development of one biological drug costs EUR 2 billion. Of course, we do not carry out the entire development, but nevertheless we are the only player in this field in Slovenia. It is very important that we have all these capacities and capabilities and that we acquire development and production projects that represent state-of-the-art technology in the field of biological medicines.
In general, we can say that we are moving from simpler stories to more complex ones; the simpler ones are more easily taken over by other companies within the group. We also bring the agility we have to the innovative portfolio. Because we know how, because we will also learn new technologies and because we have capable employees, the Novartis Group will also support most of this portfolio in both development and production. In general, Slovenian locations are the ones that benefit from investments and the number of employees. Last year we hired 650 new people, the year before about 400 people.
Thus, the Solids Ljubljana and Solids Lendava, which are the largest packaging centers for Novartis, have gained a development opportunity as part of Novartis’ transformation strategy to become one of the key parts of Novartis’ innovative pharmaceutical production globally in the coming years. Also in the field of drug substances, we are shifting from a generic portfolio to innovative medicines, as more and more active pharmaceutical ingredients will be made for innovative medicines. The Mengeš site is strengthening its role as the Novartis Biotechnology Center. It is not only one of the most important Novartis sites for the development of biological and biosimilar medicines, but it is also the only industrial center for the modern production of biological and biosimilar medicines in Slovenia.
The Prevalje site is the one we are transforming completely, from the production of medicines into a part of the global operations center. Namely, in Slovenia, the backbone of the management of almost the entire Novartis production network is being established in several segments, from quality control, supply chain, logistics center, engineering and the like. We are also investing heavily in new digital technologies.
So you are always looking for your competitive advantage …
Of course, we also offer it to the Novartis group, which is why we hired so many new people last year, because it showed what we are able to do and can do. Within the Novartis group, sometimes some sites represent even stronger competition than external companies, nothing is set in stone. That is why I always emphasize that we need to be agile and have talents, we need to work on human resources, and the state must do its part in the field of taxes and the rest of the business environment so that we can be competitive in the long run.
Highly educated staff are needed both in innovative medicines and the complex development segment as well as in generics and biological medicines. For example, in early June, when Swiss President Guy Parmelin together with the Slovenian Prime Minister and the Minister of Economy visited our Mengeš site and viewed the new laboratories for the development of biological and similar biological drugs, a junior associate working on a doctorate in chemical-biological IT sciences, presented state-of-the-art technology for programming the simulation of analytical work - so before we analyze something in the laboratory, we use artificial intelligence to simulate what will happen and thus predict which experiments we need to do at all.
It still takes 6 to 8 years to develop a drug and if you can shorten this to 2 to 3 years, then you can see the impact of technology on development and costs, and at the same time you can offer a solution to the patient faster. For example, if you can use artificial intelligence to review the development data of recent years and look for connections that have been overlooked, you can make a key contribution to new treatments.
How much do you invest in innovation and development?
Every year we invest around EUR 200 million in research and development and new projects. This year, we are on a good track and well on our way to investing more. We invest in capacity expansion as well as in innovative approaches. In the field of development, we invest in digitization, artificial intelligence, simulation of analytical methods, robotization and so on. In mid-June, we saw how the preparation of samples is completely robotized. In our company, scientists are now really involved in project planning, science, while all operational stages are automated as much as possible.
I am very proud that in a few years our Ljubljana site will be the first continuous production site within Novartis and one of the few in the world. We started this project last year and it is expected to be completed in two to three years. Continuous production means that everything from the raw material to the final product will be automated and carried out in one step. When the tablet is finished, analytics will also be done, which means that the tablet will be suitable to be put on the market. It will be a self-regulating process, which means that all parameters must be captured in real time, as this is the only way to determine whether the product will be suitable in the end. Of course, this means that you also need to have products developed for this type of production. For me, this is a state-of-the-art technology that we initiated in Ljubljana.
In addition, Mengeš is very flexible with its new plant for the development and production of biological drug substances; as these are smaller batches, we are able to switch from one product to another very quickly. Therefore, we will also be able to prepare new products for the market relatively quickly. If there is a demand, it can also be transferred elsewhere or to some other technology.
We are also taking a step forward in the area of access to patients. In Slovenia, we are involved in a pilot commercial operations project, aimed at transforming the model of cooperation with patients. The fact is that we enter such pilot projects or get new technology or we are entrusted with a bigger role mainly because we are agile, because we are an environment where certain things can be done and because we work well with academia and the economy. The element of connecting and forming a multidisciplinary team for the project is very important here.
The external public also acknowledges our innovation with various awards, such as the Golden National Award for Innovation, presented by the Chamber of Commerce and Industry of Slovenia, awards to Slovenian scientists within the Novartis Group for outstanding achievements in the field of research and development and the like.
What is your assessment of the situation in the global pharmaceutical market?
Covid has accelerated certain trends so that the cards have shuffled a bit, but mainly in the area of vaccines, while in other areas certain issues still remain unresolved. Pharmaceutical companies that will have answers not only for treatments but also for the cure of certain diseases will definitely be at an advantage. Mastering new technologies and therapies will be key, as well as the ability to integrate the basic knowledge of companies with new technologies.
A few examples: is it possible to bring artificial intelligence so far that you will be able to perform a simulation for the organ on which you want to apply the drug. If I exaggerate a bit, that means you could do 10,000 experiments, but today, when it’s being tested on humans, you can do 10 experiments. It is very important which pharmaceutical company will be able to use artificial intelligence and other digital tools by expanding the range of operations, accelerating research and development and transferring these elements to the field of production and interaction with the patient.
Medicine has not been very personalized so far, but now it will be. And patient associations are becoming increasingly engaged as well. Involving patients in earlier development and bringing along not only the drug as such, but also in the form of some kind of service - these are stories that will make the difference between pharmaceutical companies.
Or, if you have a solution to some traditional problem; and Novartis acquired the active ingredient (Leqvio) for the treatment of hypercholesterolemia by acquiring the Medicines Company in 2019 (Leqvio). This heart medicine for bad cholesterol, which can be administered in only two doses a year, is undergoing a registration process in Slovenia, as it was approved by the European Medicines Agency (EMA) in February this year.
It will also be important for the success of companies to embrace the recommendations of the sustainable ESG policy (Environmental, Social and Governance); it is about the environment, society and the investment management aspect itself. It will not only be important what we do as a product / service, what we offer to the patient or the healthcare system, but how we do it, whether we are environmentally efficient and whether we do it in a fair way and transparently. And we have been focusing intensely on this for many years.
An important segment of every company is human resources, how do you take care of them? Is it difficult to find the staff you need in Slovenia?
We already have more than 5,100 regular employees. Due to good connections with academic institutions as well as faculties in the scientific-research sphere, we are still able to find the majority of our staff in Slovenia. However, we want greater internationalization of the workforce. For many years, we have been very proactive in finding talent and experts, including by organizing internationally renowned projects such as the BioCamp and Novartis Career Breakfast.
Slovenia ranks between 30th and 40th place in terms of competitiveness for the workforce. The parameters are interesting though - our education system is between 15th and 20th place globally; our ability to attract staff, however, is far behind. Therefore, we welcome tax changes so that we can be competitive, because we cannot train staff for demanding technologies, for example if we go into the field of genetic technologies in Slovenia, but we will have to import them at least to some extent. From this point of view, the ecosystem must be suitable.
We are very proactive in this area. We have established an entire ecosystem, from rewarding to working conditions, goal setting and employee well-being. The latter is extremely important, which is why we have developed the Energized for Life program to support and encourage a balanced approach to the integration of work and private life, which has become an increasingly important factor, especially during the pandemic.
All of this, including the academic sphere and the taxation aspect, needs to be combined so that we can get the quality staff we need. We are already big within Novartis, let alone within Slovenia. We are aware that motivated and committed individuals are a prerequisite for success. We follow Novartis strategy and strive to encourage our employees to unleash their potential through various actions and approaches. We create an unbossed, curious and inspiring culture based on integrity and embracing diversity. This is a condition for successful and committed employees who want to contribute to achieving common goals.
Employees are ambassadors of our company, our brands and all certificates received – two years in a row we are the recipient of the award for the most reputable employer, we are also the recipient of the international certificate Top Employer for 2021 – show also the outside public that we are a well-organized company and a preferred employer.
This year you are celebrating three important anniversaries: 75 years of Lek, 25 years of Novartis and 15 years since the approval of biosimilar medicines. What do they mean to you and the wider environment and how will you mark them?
Lek is the first and oldest pharmaceutical company, and we celebrated these 75 years in June with the visit of the Swiss President to Mengeš, where our story actually began. This also means that Slovenia has already had a tradition of pharmaceutical production and knowledge. And Novartis carried out a friendly takeover of Lek because there was a pool of talented and expertise here. This 75th anniversary also coincided with the 25th anniversary of Novartis, because we have been working with them since 2002, and therefore in April we were able to mark 15 years since the approval of the world’s first similar biological medicine – in 2006, the European Medicines Agency approved the use of Novartis (Sandoz) Omnitrope.
Biosimilars bring a number of important benefits, both in terms of access to treatment for patients and in terms of the sustainability of healthcare systems. With the savings they bring to health funds, they can focus on innovative products that improve the lives of even more people. Novartis (Sandoz) has more than twenty years of experience in the development and production of biosimilars.
We play a big role in this area, as it combines the knowledge and talent we have in Slovenia, as well as the financial strength and additional knowledge brought by Novartis so that today we can say that we have the only center for development and production of biological and biosimilar medicines in the country. Most likely, we would have had some of this if Lek were still independent, but not much, because we would not have been able to afford it financially. This is the element we bring.
And what have we brought to society? Our research showed that last year we reached just over a million patients in Slovenia with our medicines, the added value of which was EUR 650 million, because people were not on sick leave and because they were able to continue doing their jobs. At the same time, in addition to our 5,000 jobs, we created an additional 8,000 jobs in Slovenia.
As you have already mentioned, one of the two Novartis global operations centers will be located in Slovenia. How many workers from the Prevalje site, which will be part of the global center, have you been able to re-employ there? Which staff might you be still short of?
Currently, about 80 people from the Prevalje location are already working in the operations center. The transformation is still underway, because we are still manufacturing in Prevalje, so we cannot re-employ everyone we would like. In the operations center there are approximately 600 people (re)employed. They operate across all our sites in Slovenia.
We had a large staff pool available for the supply chain. However, we are still looking for new staff and we would like a better staff pool in the field of engineering and production science and technology, i.e. for production management. The latter requires a wide range of knowledge, because if I have the production of biological substances in France and I have a technologist in Slovenia, he/she must have knowledge at this level - or if I produce one part of a gene technology in Austria and have a technologist in our country, he/she must have the required knowledge and skills. What worries me the most at the moment is whether and how quickly we will acquire the right staff.
Quite a few experts also came to us from Novartis to work, for example, as team leaders to help build new knowledge. No other pharmaceutical company has yet embarked on such a journey, which is why Novartis is the leader here - everyone has operational or service centers for accounting, but no one for this part of the supply chain. And this is an interesting experiment. So far, we are successful, and we also have high demand. But we could take on something else from the center that was not possible before the Covid outbreak, but now it is. We will work on this intensely in the next two years.
In mid-June, you signed an agreement with Tab Mežica regarding the purchase of a new production building in Prevalje, which is not in use. What does this deal cover?
We signed the agreement on June 14, and it envisages that up to 95 employees from the Prevalje site will get an opportunity to work in Tab – some by the end of this year, and the rest according to the dynamics we anticipate for the completion of our production and will be a matter of mutual coordination.
Since we have certain profiles in the operations center, we also wanted to give the opportunity to all other employees. Therefore we made a good deal with Tab. The employees are receiving additional reskilling training, so I am optimistic that we will keep the promise we made.
And finally, in those turbulent, stressful times when gyms and tennis courts were closed, did you relax with a flight simulator or in some other way?
I still relax with a flight simulator. However, the company offered many different opportunities for relaxation and exercise at home during this time, as well as opportunities for professional and personal development, so I didn’t miss anything. And as catering venues were closed, I also improved my skills in cooking and preparing various, new specialties.